EP 6: Fix This Next In Your Business with Mike Michalowicz

Narrator: (00:01)
Welcome to the process to e-com profit podcast, where we know top line sales, just isn’t enough to have the business of your dreams, learn to run a profitable business online that doesn’t run you

Cindy: (00:16)
Well, I’m pleased to introduce today. our special guest Mike MCZ. Mike has been on a mission for many years now to eradicate entrepreneurial poverty. And, he’s been doing that for through some wonderful books that I know you’re familiar with. Profit first is, is becoming like a cult classic in the entrepreneurial world. And along with the pumpkin plan. And today we’re gonna talk with him about fix this next, but, but his latest book is, out there. now about marketing is called get different. So I encourage you to check all of those things out, Mike. we’re so glad to have you here and

Mike: (00:54)
To be here with both of you and Cindy, our story, you know, it’s not like public knowledge, but we go back quite a while now, starting with the, the early stages of your business working together and what you’ve accomplished, what Robin and what you’ve accomplished too, is just the stratospheric success. the impact you’ve had on so many people is amazing. So I’m excited that the table’s been turned for this, this interview.

Robyn: (01:16)
It, it has, and it had your books have been, so intermetal, you know, in the Amazon space, you know, I, you know, like in the different groups, it’s like every couple months, somebody’s like, I just found this book and it’s like, oh, well, it’s gonna be one of Mike’s books. You know? So, there’s so many, right. You know, they might be toilet paper entrepreneur. It might be clockwork. It might be, profit first, in fix this next is I think where a lot of Amazon sellers could kind of get their next big thing. because so many, it’s easy as an Amazon seller or an e-commerce to just kind of run from fire to fire, to fire. yeah. So, you, you, and it’s, you just gotta get stuck. There’s like this survival trap that you talk about, that you need to kind of know where the problems are in your business. Can you explain like the business hierarchy of needs to kind of help people diagnose their issues? Yeah,

Mike: (02:08)
For sure. And it’s cool. I’ll start a little bit with a teaser of what the survival trap is. This we’re on the same page and then the solutions of the framework. And to your point, Robin, Amazon sellers, the problems are only amplified because there’s these big windfalls of cash and this big depletion, right? So, it’s, it is like you’re in a washing machine, on top of running a business. So, the survival trap was, an analogy I use from how hikers get lost in the woods. And these stories break out consistently. And unfortunately, someone gets lost in the woods. And when they’re found by a rescue crew, hopefully live sadly many people perish. They often have been working, walking in these circuitous patterns. Often, they’re just a mile from where they got lost. They’re, they’re, they’re so close to the exit, but they just keep on walking in circles.

Mike: (02:57)
And it’s like, oh my God, that’s such a clear analogy to what business owners experience. We are so close to success, but we seem to never get there as the years roll by because we just keep on walking in the same circle. So, what’s the compass, what’s the one they’ll post in the, the tool that’ll post in one direction. So, we can March forward. And that’s how I devise the business hockey of needs for fix this next. And the business hockey of needs is a five-level structure as a translation from Maslow’s hierarchy of needs. The idea behind this is that the human needs structure, we are a human entity is very similar to the business structure. Cause it too is an entity with one significant and critical difference. We are wired into ourselves. So, we have the inputs with our site, hearing, taste, touch, all those things result in a culmination that we’ll call a gut feeling.

Mike: (03:48)
I feel hungry. It’s a sensation that’s triggered by things, or I feel frightened. somebody’s wrong here. Those are your, your senses triggering something. So, we are told and we should trust our gut. And it’s awesome for human survival in our business, we are not wired into our business. that gut instinct doesn’t come from what the business is feeling. It’s just our senses. So, it becomes very precarious and tricky. So many business entrepreneurs say, ah, I just need that Rainmaker, that inventory. I just need to double down the inventory such a good deal. I can just feel it. And then we’re a wash and trouble. The reason is cause we’re not looking at the inputs of a business. The input of a business is the data like you’ve got to analyze the numbers and ideally bring an outside expert. Who’s not emotionally attached to those numbers who can just give you the cold callous reality.

Mike: (04:40)
The, the business needs, therefore there’s five indicators that these senses, these, this data will point to foundationally is sales. If a business doesn’t have sales, a source of income, it’s suffocating, it’s equivalent not having oxygen. So, you have to have inflow of cash. The next level though is profit, which is a retention of cash. And, and profit brings about stability to an organization, no sales, you can’t have profit. but once you have sales, you should extract profit. Anyway, argue and Maslow argues this too is at each level we’re looking for an adequate supply. You don’t look for more and more and more sales. You don’t, it’s like saying someone who’s, not healthy, should just breathe deeper and deeper and more. In fact, the consumption of more oxygen actually can cause more problems. So, it’s, it’s the appropriate level. We need appropriate sales that can facilitate profit.

Mike: (05:29)
Once you have sustainable profit. The next component of that is of importance is order or efficiency through an organization where it’s less and less dependency on the linchpin off the owner in a small business. And then once that’s adequately addressed, we can focus on impact. Impact is when your business is providing transformational services, as opposed to transactional. It’s where you’re not just a product. There’s a, there’s a meaning behind this. There there’s community or something, highest levels. Legacy was where the business designed to live on in permanence. And just kind of the final elements of this is all these things are necessary at all times. I’m not saying you only focus on one and everything else goes by the wayside. But what I am saying is only one thing can have our heightened attention to fix it. So, you do have to have sales and profit and all these things going on, but where is the biggest problem right now? Let’s resolve that in the hierarchy, strengthen it. And then we can focus on the next level that needs us.

Cindy: (06:25)
Well, I love, I love the fact that in each of those levels that you define Mike, that you go into like five key components of each of the levels to help people understand. I mean, sales is a really broad topic there at the bottom, you know, you know, but so let’s dig into what are some of those, some of those pieces that make that up and for our, our clients, folks that are in eCommerce businesses, a lot of them are fairly new. A lot of them experience success fairly quickly. It’s really fun to watch somebody. I had one client that grew from nothing. We started with him, and he was just kicking off and went to 33 million in two years. I mean, so eCommerce has a huge, huge opportunity, you know? but when, when they get started like that, O oftentimes it really is about lifestyle congruence. They picked eCommerce because there’s other stuff going on in their life. And they’re trying to make sure that, that, eCommerce, kind of feels some of the bill. Can you talk about why, why lifestyle congruence is really a, a foundational piece for a business owner?

Mike: (07:36)
Oh, for sure. So, to your point, Cindy, there, within each of these five levels, there’s five core needs identified. That’s consistent for all businesses. Collectively now becomes 25 needs. I call this the DNA of business. And the analogy here is like, if one of the three of us, hopefully none of us was rushed to the hospital for a, a concern with our heart. And the doctor says, I need to do heart surgery. She wouldn’t say to us, oh, your heart, is it in your foot? Like, where do you keep your heart? Because the human makeup, once you peel back the skin, it’s, we’re the same yet we place judgment on the skin was someone look like, was there height, their sex, their skin color? Well in business, we place that same kind of judgment. Oh, you’re, you’re an e-commerce. Oh, you don’t understand how a pizza shop runs.

Mike: (08:24)
Once you peel back that DNA, there’s this common core needs and the foundational one to your point within sales, it’s called lifestyle congruence. I would argue that almost every entrepreneur it’s upwards of 96 or 7%, perhaps more of entrepreneurs I’ve interviewed and surveyed. I ask them, why’d you start your business. One, their top two responses is for financial freedom. The other one that’s just as common as personal freedom, personal freedom’s defined by. I wanna do what I want when I want. And financial freedom’s defined by. I don’t wanna worry about bills ever. And there is this link. We work in synchronicity that if, if the business is struggling financially, it’s not like at the home life. Financially is roaring. It’s often that we try to compensate for it, and both have a collapse, but the reverse is true. If my home life financially is struggling, the business is gonna feel that consequence I’m gonna start stealing from the business.

Mike: (09:20)
I would never use those terms, of course, but I will take from the business inappropriately and compromise the business. Therefore, the health of the business depends on the fiscal health of the own. Their lifestyle must be congruent with what the business can support. And sadly, many of us, many of us go into business without that expectation. We just say, well, I wanna live a great lifestyle. I’m gonna start doing it. And this business will support it. Now we gotta ask, what stage is the business in? How healthy is it basically? And what can it contribute to my home life? And my home life must work within those parameters. If you do that, your business can run health into perpetuity.

Robyn: (09:58)
You know, and I think that, that second peer part of the pyramid profit is something, you know, I was with, I was telling Cindy in other episodes, I was with somebody and they were having financial trouble and, or, you know, they were struggling and they were like, well, sales solves everything. But the, and there’s a point where that, that actually can, it can hurt more, you know, profit is such an important part of the PR the pyramid. And how does that work in with profit first?

Mike: (10:27)
Yes. Great question. And it really does get my goat when I hear sales, cures, everything, and, and there’s major pundits, like big names who say, this sales is necessary. It is oxygen, but it’s like saying, if you’re starving to death, just breathe more. It won’t fix it. The business is a similar to a biological entity. There’s many things that must be satisfied, not just one thing. And amplifying one thing actually can make us lopsided and disproportionately, focused, and then there’re gonna be great consequences. I think what one thing is about sales that, that we don’t consider is sales means obligation. Every time you sell something, you have an obligation to deliver that product or, or service to that individual. But the more you sell, you’re actually amplifying the obligation of your organization. So, selling more means you have more to do. And that’s why these become shackles, make people sorry to sell their way to profitability and are actually shackling themselves with responsibility and become overwhelmed.

Mike: (11:26)
So we have to bring the balance profit equals runway. the more profit and particularly the more you have reserved and not distributed your business can get through the peaks and valleys of, of the changing environment. If sales slowdown, doesn’t matter if sales increase and merge more obligation, we have profit to pull on to get more resources. So, profitability brings about stability. It is the essential component. And I would argue any e-commerce seller. If you sell a dollar of goods every year, there is a profit that can be taken from that. If you structure correctly, it doesn’t matter if you’re doing the 33 million or, or the 3 million or 330,000. It doesn’t matter if you have any source of sales. We have to have a profit formula in place to be extracting habitually. That profit, my saying is profit is not an event. Profit is a habit. Meaning every single transaction, we accumulate small ports of parts of profit. And interestingly that will go back and support lifestyle congruence. You may be able to afire your lifestyle as you withdraw some of the profits to support yourself. So, your lifestyle congruence will be inconsistency with the profit levels. And we also have what’s called cash equity. We’ve reserved cash building in the business at the same time, which only strengthens the business

Cindy: (12:43)
Well. And, and it speaks to, you know, having profit really speaks to that personal freedom that you were talking about before, too, because to be able to have that personal freedom, you have to have structures and systems and resources in place so that you don’t have to do everything. And I know eCommerce is kind of neat in the sense that people can get started with a very skeleton crew, but as things grow and it’s them all the time, it really starts to put a lot of pressure on, on them as individuals. And so, the, the next level in the hierarchy is talking about order. And the, the thing that I, I love that I love that that’s where I like to live. I love to work on the order stuff. You know, I like to think about the, you know, the Lynch pin redundancy and the role alignment. So, profit kind of helps you buy your buy order in your business. I think I, I’m just curious what, what you think about that and how you, how you think lynchpin redundancy in particular and role alignment. how, what should people be thinking about with those, factors?

Mike: (13:52)
I think order efficiency is the sexiest part of a business too. I it’s just because there’s so much amplification that come out of it, if you do it right, it will actually back feed into greater profitability. It can amplify sales because you can deliver faster, better. and it can facilitate next level growth too. That’s why I order sandwich in the middle. It can facilitate transformational experiences for clients. You know, one of the stories I use is Harley Davidson. when it comes to transformation, I’ve never driven a motorcycle. I’m not into motorcycles, but you, I don’t know if you are either, but everyone knows the Harley Davidson brand. And everyone knows that some people stamp, you know, Harley Davidson on their shoulders to show the part of the tribe. They’re, they’re putting the company logo on their shoulder. Like that’s the dream I have when someone just stamped my face on there said, I love Mike’s books.

Mike: (14:42)
You know, that’s when you’ve arrived because people have bought in so much, but the only way Harley Davidson could get there was by bringing about efficiencies, Mr. Or Mrs. Harley, and Mr. Or Mrs. Davidson, aren’t making the bikes. I, I suspect they’re not even alive anymore. They they’ve created systems that bring a repeatable, consistent high level product as they define it over and over again. And that’s what we need to do too. In our business, we need to be able to consistently deliver the same level. But if you are the Harley or the Davidson family organization, you can’t keep doing it because then you are the linchpin meaning you can only elevate the company to your level of contribution, your effort. And sadly, Cindy, I see most business owners try to do this is I wanna grow my business. So, I need to work harder.

Mike: (15:29)
I need to grow my business. I gotta start, you know, canceling family events and work this weekend. I think entrepreneurs confuse growth and scaling. Actually, I know they confuse it because they use the word scaling. And when I look at the business, they’re trying to grow. The concept of growing is doing more, to get more. The concept of scaling is doing less to get more and they’re radically different at this order level. It’s about scale. How do we remove any dependency on individuals that’s linchpins? How do we, reduce the demand on our organization? just usually by reducing variability and, and emphasize the things that are working and, and put less effort through the organization to get those things done. It’s a much more sophisticated level of work. When, when I was writing clockwork, which tackles part of this order level. I said, if, if someone’s given two tasks, if 15 minutes to solve this one is to dig a ditch of a certain depth.

Mike: (16:25)
Another one is to solve a Rubik’s cube. What’s interesting is most people seem to go to digging the ditch because the cube, unless you’re have a propensity, fixed rubs cubes seems impossible. And it’s very frustrating. It requires a lot of mental calories digging a ditch. You see results immediately. You got that first dig in and you feel the momentum. like when it comes to running a business, it’s easier just to do things cuz in the min in the moment we feel a little bit of results, but it is exhausting. Once you figure how to solve a Rubik’s cube. And that’s what our business is, is putting the right pieces in the right place. There’s explosive growth and that’s when we’re achieving scaling. So, to your point, or to your question, order is a necessary and critical level. One of the key fundamentals is to stop you, the owner, digging the ditch and start putting the right pieces and the right place. And once it all aligns, then there’s explosive scaling of an organization.

Cindy: (17:19)
I love that. And, and the, and the real side benefit here is, you get to step away and take a four week vacation and you know, I, I do it every year and this is like coming up year, number five, I think so. It’s, it’s amazing.

Mike: (17:36)
Yeah. You, you, so it’s funny when I was writing that little back story. When I was writing the book, you were one of the first Guinea pigs. We are running in parallel. I’m in year five, going into year six. Now I’m, I’m literally one, not even a year ahead of you. I’m probably a few months ahead of you in that process. And, and the idea of this four week vacation is it’s not about the owner getting a vacation as much. It is about the business, getting a vacation from the owner. You can extract yourself from your business for a consecutive extended period. It mandates the business must operate in your absence. And that’s the whole goal in the first place. So, I invite people listening in right now, book that vacation, not for tomorrow, you may not be ready, but book it for a year from now, maybe a year and a half, but the second you put it in the mind shifts from digging ditches to solving puzzles and figuring a way that the business doesn’t need you to do everything.

Robyn: (18:29)
You know, I, I was actually talking to somebody just about this. And, I was like, your business is kind of like a teenager right now. If you want that teenager to go be a productive citizen and not have you have like having to call in their doctor appointments for the rest of their life, you have to get them working on their own, you know? And, and that’s really what’s key.

Mike: (18:48)
Yeah. Don’t be that helicopter parent or what is it lawnmower parents now like, don’t be that person’s plowing in front. Yeah. The business has to grow its own and, and it is true. It is its own entity. Here’s why I also found fascinating. If you have team members and team members are defined by employees could be full-time or part-time contractors, vendors, you know, any of those people they’re on your team, they are working in different strategic relationships, but they’re all working to support the end objective that you have. Those team members feel empowered when you are not the one doing everything. That was amazing for my own business. When I went my first, four week vacation, I returned, and similar Cindy, to your, experience that I know I interviewed you about this. I came back and said, how did my team, how do you feel about me not being here? And they said, we like you, but we, we feel great. We feel that we can step into this. We feel we got this. We’ve never felt so empowered before. So, it’s not that you’re putting burden on your team members. You’re giving them an opportunity to grow, to be empowered

Robyn: (19:49)
And feel successful and feel like they’re contributing to the business. They’re not just digging a ditch like this, what they do really matters.

Mike: (19:56)
Yeah. And, and we listen, we don’t hire people necessarily for their physical ability. It more often it’s for their mental capability, but then we don’t give ’em that opportunity. I was notorious for doing this for well over a decade when someone would, come to me as a new employee, I’d say, okay, please go do this. They go do it. They’d come back and say, okay, complete that. What do I do now? And I’d say, mm, do that. And I started channeling what they did, and God forbid, they had a problem doing what they do. They’d come back and say, what do I do now? I’d say, okay. do this, do that. I was the sole decision maker. The problem here is I’m restricting them from making decisions. but also, I’m, I’m teaching them not to make decisions. Every time it came to me, I said, this is the way you do it. If they followed my instruction and the outcome was wrong or bad, it wasn’t their problem. I was the who told ’em to do that. They complied, if the outcome is good, they did what they’re told. They’re a great employee. They complied. And so, I was actually entrenching them not to use their brains. And yet that was the biggest strength they had. I, I restricted that from presenting itself.

Cindy: (21:04)
Well, I just wanted to follow up on that. I, I think the other piece of that is, the person making the decision just really gets burned out from having to make all the decisions too. So it’s not good on for the employees and for the health of the business, but the owner just, you just reach this point of, I can’t decide another thing, you know, and

Mike: (21:25)
Yeah, they, I think the term is decision fatigue and, yeah. And I’ve, I experienced it. And what happens is these flippant decisions. So initially you’re considerate and thoughtful maybe in the morning, but when decision number, you know, 15 or 15 million comes to you, so it’s like, whatever, you know, do you want your business being run by someone? That’s like, whatever, of course not. But if you take on all that burden, that’s, that’s probably even the only response we can give when we’re exhausted

Robyn: (21:51)
And not to go too far off topic on this, but you’ve interviewed so many entrepreneurs, you’ve worked so closely with so many entrepreneurs for somebody who is saying, saying, well, look, I’ve been trying to do this. I read emo, blah, blah, blah. I can’t get my mind to get over whatever is that’s stopping me. What would you say to them?

Mike: (22:09)
Yeah. emo is an extraordinary book and it’s a great concept. I actually had dinner with Michael Gerber, and we talked about this. And I said, one of the challenges that I had when reading emo was that I was anticipating a flip of the switch. That one day, if I stuck with this long enough, all of a sudden, the business would work and I can work on it as opposed to in it. And he’s like, no, no. As a throttle. And that’s when I was working on clockwork, I wanted to show that it’s a process. We need to get these minutia. These small wins right away. Don’t delegate everything. Can you delegate one task? So, I tell someone that’s struggling. We gotta ratchet this down to the smallest win right now. What’s the thing that you’re doing. That’s kind of easing, but, but it’s distracting and kind of gets your goat and it, maybe he’s responding to the same 20 questions that come in email.

Mike: (22:53)
Okay. That’s the one thing and whatever you pick is fine. Let’s just pick one thing. Let’s learn to delegate that one thing. And maybe we’re gonna hire a virtual contract and it works one hour a week and those people are available. and, and sign this one thing out. What we’re gonna learn in the process is, was true. What true delegation is, I talk about different modes. There’s a doing mode, but there’s also, what’s called a deciding mode. And that’s the trap. A deciding mode is where we’re deciding for others, like shared before a delegation mode is where you’re not assigning a task alone. You’re assigning the outcome for those tasks. And there’s an agreement. So, when it comes to these emails, for example, I can say, please respond to these emails. and here’s how you do it. When you have a question, come to me, that’s deciding phase and it restricts, it restricts the growth of myself.

Mike: (23:37)
And my colleague delegation is the explanation. And the understanding that the reason we respond to these emails is this a great way to retain our clients. When they have a problem with one of our products, they send common questions. And if we ignore them, they’re gonna refund, ask for a refund, or return this product. When often it says a user issue that they need to solve, that requires a rapid response. So, they don’t feel ignored and a thorough response and an opportunity to ask more questions. If it doesn’t satisfy them, do you understand the necessity or do you agree that’s necessary to respond fully and openly that they can still engage with us? Yes. And I’d actually have my, my, colleague reframe that to me, and I’d say, well, why do you feel that’s true? Cause I wanna hear it in their own words.

Mike: (24:18)
And I say, okay, we have a best practice. That’s the task. This is how we’ve been responding. Your job is to do those rapid responses with an open framing. So, people can engage. If you see any opportunity to improve upon our best practice, do it. If you see a roadblock in the way do whatever’s necessary to get to that outcome. And that’s a true delegation. And what I found is when I done stuff like that, first of all, it’s hard for my ego to swallow that. Now I’m gonna kind of have a blind eye to it. They will still come back. And the reason they come back is I’ve trained this person for so long, always to come to me and follow my explicit instruction. What I haven’t changed when they came back, instead of saying, oh, do this now, I simply say, what have you decided?

Mike: (24:58)
They say, well, we ran this roadblock. I, I haven’t decided anything. What will be your decision? I don’t know. Well, I hired you for that brand on your shoulders. It’s your job to figure it out. And then I bite my tongue from saying anything else. And I have to now start making this transfer of trust that I trust them to see the outcome through one last little caveat here do not expect perfection. Perfection is defined with a very narrow framework. Perfection is what I’ve defined historically to be perfection. First of all, I really don’t know what perfection is. It’s my own bias. So, when they don’t comply with how I would do, I’m like, well, that wasn’t perfect. Well, first of all, that’s just how I would’ve done it, but maybe there’s a better perfect. The second thing is sometimes I make mistakes that are pretty, undisputedly a bad decision, but so have we, and you know, we don’t fire ourselves. We don’t reprimand ourselves. We’re like, that was dumb. And then we get right back on the horse when they make a mistake, you’ve gotta allow them to say, that was dumb. And get back on that horse.

Robyn: (25:53)
And that last kind of go back to the fix this next. And because I think that, you know, as people do that, it’s so hard, you know, they have to stretch themselves so much that sometimes looking towards that impact and legacy can kind of keep them moving in, continuing to do the scale cuz you can’t get to the impact and legacy completely until you take care of these, this next level of needs, you know, could you, could you talk about how, how that part of the, the hierarchy really can, really change the way that the business and the entrepreneur are functioning together?

Mike: (26:28)
Yeah, so I can, so there’s five levels for the hierarchy that we went through, right? And the first was sales, profit, then order the next two levels of that impact and legacy. Now what’s interesting. Those first three foundational levels, if you will, are about what the contribution, the, I shouldn’t say contribution what the company gets. We need to get more sales; we need to get profit. We need to get efficiency within the organization. So those three first three levels are all about the, the growth of an organization from a very transactional kind of format. And I also want to argue that you can choose to stop at those levels. You can focus on those three and your business can achieve 33 million or 50 million or whatever the number is or 3 million. And you could be living a, you know, the life of a fat cat and happy.

Mike: (27:14)
That’s wonderful. And if that gives you joy and satisfaction, do that. I have a friend who grew it’s a 15 million business or so on revenue. also be very careful about judging revenue, revenue, just, numbers, how healthy is the organization? It’s very healthy, it’s very profitable. And I said, oh, what are you gonna do now? He’s like, I’m just gonna golf twice a day if I can for the rest of my life. And that’s wonderful. But I also think that there will be a day when he rounds an 18th hole for the umpteenth time that he says, is this all there is. And I think when, when you have that feeling, that sensation is this all there is, there is more, and that’s the time to, to satisfy that in your business. The, the impact level is when you see your business is more than just a commodity.

Mike: (28:00)
It’s more than this transactional, that, that there is no alternative to you because of the experience or the emotion that the, the experience with you you’re having. For example, I, I just bought candles recently, for our house and, there’s a ridiculous amount of candle makers, but this one person started to share her story. And, why the meaning she puts into these candles and that, there’s a, it’s, it is from it’s an international providence case and they live near beach, and she goes, each candle has one drop with a sand from their country. There was a story baked into it. And, and what she was saying was when you burn this candle, I want you to think about this experience, you know, or the culture. And there’s a lot more to the story, but I want you to think about this.

Mike: (28:50)
That was a transformational experience. You can make a candle to light something up, or, you know, have a nice romantic setting, or maybe you’re doing meditation. That’s why I brought floor for meditative practices. but now this has a meaning to me of greater significance. And that is what impact is about when, when you abandon that this is replaceable, and you make it irreplaceable. Cause it’s one of only one and the consumer sees it that way. I will never buy anything, but a Harley Davidson because that’s who I am belong to this tribe. the highest level is legacy, and legacy is a business that’s designed to live into perpetuity beyond the owner, but not because this is a generational business. Like my family’s gonna own it, but because the business must live on generationally. Here’s the best example I have. And I, I did write about one of my books is, I was interviewing a guy named Philippe from Guatemala, Guatemala City specifically.

Mike: (29:49)
And, I didn’t know much about Guatemala. I went down and visited him. Guatemala City is where the affluent people live in that area. It’s about 1% of the population. 99% of Guatemala is very poor. And it’s in the rural areas around Guatemala City and on the outskirts. But what he shared with me is that the poor population, does not have a source of water besides the rivers. So, they pull water from the river, which are ridden with pollutions and pollutants and bacteria. So, then they need to boil the water. The average worker back then was making $1 us a day. So you make $30 a month. On average, it is a hand to mouth living. And what you do with a lot of that money is you simply buy and procure firewood because you need to boil water. So it’s a handout living and, and people live in, in shanties and shambles, Philip, found a product.

Mike: (30:43)
He didn’t invent it, but he procured it. an inventor created this clay pot. That’s infused with a silver web and silver. The material. Silver has this miraculous quality that when bacteria touches silver, it kills bacteria. You may even seem band aids that are infused with silver. Actually it kills bacteria cuz this quality. Now you can do these clay pots is the water seeps through it very slowly, but as it goes through it, it goes past this silver webbing killing the bacteria. You can pour in and I’ve seen demonstrations, future water into this pot and slowly seeps out, sweats out this pristine Even like water and it’s consumable. What you started to do was selling this to the rural and the city population. I do wanna add the point is he did it profitably. Yes, this is a great contribution to society, but for a great contribution to sustain, it must be profitable.

Mike: (31:38)
It must be sustainable. So he followed the model one day, he got a call and it was from, a environmental study going on and they said, we gotta talk to you. You are changing the environment. And he goes, what are you talking about? Well, here’s the story. People started buying these clay pots. they cost about $30, which is a month salary. That’s a real big investment, but they do last for five years and you don’t need to burn firewood anymore. It bought the clay pots months. Two, your $30 of income comes in. You don’t need to buy $30 of firewood. You just use the clay pot. So now their income was increasing and people are improving the quality of their living standards, their homes. Some people are starting to invest in small businesses and so forth. This, this, the greater thing or the just as phenomenal was this study noticed that the environmental air quality was improving at a rate better than any other nation, Guatemala kicking every in other nations, but in air quality.

Mike: (32:35)
So they sent out ground crew to see, what are you doing? We’re not, not burning firewood. And then when Philip heard that, he said, oh my gosh, this product, isn’t just helping individuals. It’s helping our globe. He goes, this must live on. And I said, how’s it feel like to be a business owner of that? And he said, these words that transformed me. He says, you know what? I woke up and I realized I’ve never been a business owner. I’ve always been a business steward. And that’s when I said, oh, I get it. I get it. He has a responsibility, God given or self-given, but given a responsibility to transform country or globe. And he said, this business must live on generationally. It’s not about his family. It’s about saving the world in this case. Literally that’s what legacy is. And I think any business we can choose to lean into that the day you realize that business is greater than you. And it’s a necessity to be of great service to our community.

Cindy: (33:32)
That’s awesome. That’s a great story. well, you’ve been very generous, generous with your time, Mike, and it’s been fun talking about all your past work, but you always have something, two or three books in the hopper. So can you tell us what you’re working on next?

Mike: (33:50)
Yeah, yeah, yeah. I’d love to. So, I rewrote clockwork. so, there’s gonna be a revising expand edition coming out this summer of 2022. I just literally just got the manuscript back from my publisher at 10:00 AM this morning. So I’m digging into the final reviews, but it it’s ready to roll the next book I’m working on also kicks off today. I’m heading on a retreat with our mutual friend, AJ Harper, we’re spending three days together and I’m working on a book about, corporate. I shouldn’t say the word corporate. I was gonna say corporate culture, but I think that’s a kind of an abused old term. What it is about is, is, is full engagement, a team that’s fully engaged. how do we get that? How do we get the most out of everyone because they want to put the most in. And I’ve found some really interesting ways to approach this that I’ve never heard documented before. And I think they’re widely effective. So that’s what I’m, I’ve documented. Now we’re gonna put into a, a book that’s gonna come out in 2023. And I am working on a couple more children’s books, as we speak also. So that’s what I’m doing now.

Cindy: (35:02)
The, the children’s books, any, any clues about what, what they’re about?

Mike: (35:06)
Yeah, I, you know, I, I think I’m gonna speak to a younger audience. So I wrote my first children’s book. I was targeting children five to eight, nine. I’m thinking I’m gonna go after that sounds inappropriate, but I’m gonna, serve a market of, of infants, up to me three or four years old. And so it’s really where mom or dad or grandma and grandpa are departing stuff. And I always, I want to give stories that depart wisdom in a fun way, that that type of book. I had a book when I was a kid called a, a pickle friend, a nickel, my dad read it to me every night. It was my favorite book. And, it had a powerful moral lesson. That’s what I’m looking to do, morals around teamwork and, and, and being a giver and contributor are things I’m focusing on.

Cindy: (35:52)
That’s awesome. You know, our, our team is made up of a lot of moms. And so for Christmas this year, one of our gifts was your money Bunny’s, book and, well, I mean, so easy to, to pass along great stuff. And I, I, it’s been fun hearing some of the, the team members write back about sharing the stories with their grandchildren. One mom is like, this is the best parenting hack ever. I read it to my daughter. She’s created her little bunnies. She’s doing her chores and making a little bit of money. And she’s like, my, this has changed my life. So that keep up, keep up the, keep up the kids’ books too. They’re really, really appreciated.

Mike: (36:30)
Yeah. You know, it’s funny. So, you know, I am not trained in behavioral psychology. I don’t have a degree in it, but it is a field of extreme interest to me. Cause I think once we understand how our mind operates, we can leverage it. One of my core beliefs is don’t try to change myself or ourselves, try to channel ourselves meaning what’s the existing behavior. And can we put a system that actually encourages that the behavior to continue, but we get the outcome we want. And why notice for children, myself, you know, too, is when we create something, you know, it’s all for all people. When we create something, we put more significance in it. So when I wrote this book, the money bun, my money bunnies, it was about first creating and bringing to life, these little jars of bunnies. But it’s, it’s mission critical that the child does this because they now have ownership over it and they start dividing up their money and now they can see their money bunnies grow. so that’s a behavioral based principle to get people children encouraged in, in sticking with the process.

Cindy: (37:27)
I can’t wait to see how they are as business owners.

Mike: (37:31)
Oh my gosh.

Cindy: (37:32)
Yeah. Thank you so much, Mike.

Robyn: (37:33)
Well, and I know that I, I feel I don’t try. I normally try not to speak for Cindy because she’s amazing. And she has got great words of wisdom all the time, but I feel pretty confident that she would be, in agreement with me on this. I want to thank you for the amazing contribution that you are to entrepreneurs as a human with your body of work. I, I know that for Cindy and I you’ve changed not only our businesses, but the way that our children have grown up and the way that our grandkids probably will grow up. And I cannot thank you enough for the tireless work you do, to make sure that entrepreneurs can have a profitable and joyful life. And we are just so grateful to know you and to talk to you, cuz you are just joy in a box and you have so much wisdom. And I we’re so grateful for you coming on today.

Mike: (38:25)
That is so touching. Thank you for saying that Robin and thank you for having me.

Robyn: (38:29)
Well, it it’s been our pleasure for sure. So, this has been another episode of the process to econ profits podcast. We hope that you had a great day and go right now to Amazon buy like seven of Mike’s books. Cause he he’s, he’s got like 85 of them. So go buy bunch of them, get them on audible, listen to them as you’re going to bed. Yeah, it will change your life too. So

Cindy: (38:50)
Hi, this is Cindy Thomason with your five minute fix, we’ve talked about the profit first bank accounts and how they can help you keep track of your funds. One account that I recommend in addition to the normal profit first accounts is an account for advertising. It’s so easy to see those advertising dollars go out the door, but do you really equate what that turns into in terms of revenue? An easy way to do that is to look back at what your expenses are. Get a pretty good idea of what percentage that is of the income that you take in and create a bank account for advertising. Then as your, sales grow, your advertising dollars grow, and you should always be seeing an increase in your advertising bank account. If your return on investment is really paying off for your advertising dollars. So it’s an easy fix.

Cindy: (39:49)
Go, go create yourself a bank account. If you use one of the online banks, you know how easy that is. if you’d use a traditional bank, maybe you can do it online or call your call. Your banker, create an advertising bank account, set that balance based on the, the dollars that you have used traditionally month by month. and then as your dollars come in and you’re allocating some dollars to inventory, then continue that practice and all allocate that amount for your advertising and then watch how your expenses come out of that bank account. Every month if you run short, then you are, that’s a message. That’s a red flag that you’re spending more on advertising than you’re actually, getting in, in sales results. So keep an eye on it. You, you can’t just set it and forget it. You have to keep an eye on those balances, but those balances are really starting to tell you something. They’re giving you, a message of how your advertising dollar is performing. And then you can take action on your advertising campaigns to ensure you’re getting, the most bang for your buck for those dollars. So that’s your fast fix for this week. Go out and create yourself an advertising bank account and start using it.

Narrator: (41:04)
Thank you for listening to the process to e-com profits podcast. Make sure you subscribe to get updates for new episodes, leave a review and one lucky winner each month we’ll win a one hour call with your choice of our hosts. A value of over $300. Keep listening to hear the winner announce on the first show of the month. You can contact our hosts by using the contact us form at process to e-com profits.com. You can also find the contact information of our hosts and show guests in the show notes for each episode.

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